Chris Dean, CEO of Treasury Prime, knows bank technology. “Most [banking technology] is firmly planted in the 1980s,” he told me. “Very old. Most of the existing systems are not evolved. If you look at a Bancorp, for instance, it is pretty much the same technology over the past 20 years.”
Such stacks might not have been developed using modern engineering practices, either. “If you’re going to build a good app and a good product, you need to build it so you don’t have a lot of bugs, and it’s easy to change,” he said. “[Modular design] is a key difference between the old and new tech, one of the many differences. The older software is not modular. It’s not fault tolerant. It’s not self-healing which a lot of modern software is. If you make a mistake, you can’t crash a [modern] system. That piece gets removed, so it doesn’t infect everything else.” This can’t be said about many old systems.
Banks historically have been slow to adapt, too. So, still today, creating a new bank account can take awhile. “Some places you still have to go into a physical branch,” said Dean. “The average time to create a commercial bank account is two-and-a-half weeks. Doing an integration, like you might want to do with a fintech, that can take a year.”
The vast majority of banking cores are built around mainframe to this day, which involves a central computer used by IT organizations and banks to host the most important, mission-critical applications.
“If you’re a programmer, and you know what you’re doing, and you want to sign up for a service –– like you want to use an API and send a text message –– you go to a Twilio, and you can start sending text messages from a computer program easily. You can click a few buttons, enter your credit card, and you can start sending text messages in like 10 minutes.”
But, if you want to connect to a banking core, it’s hard to even communicate with it. “Once you’re talking to it, it’s sending data in a weird wacky format,” he said. “We wrap the whole core in a modern shiny wrapper. And, whenever you want to talk to it, you just use the normal tools like REST calls and secure TLS/SSL connections. We take those, and we translate that into the crazy internal language of the bank, and talk to the maximum core in the right way and then it gives you back the answers.”
The mission of Treasury Prime is to make banking fast and easy. With its software, the time to open a new bank account can be reduced to about two minutes, and the company has gotten a bank live with their technology in as fast as three days. The company has two types of clients, and acts as a matchmaker between the two.
A return call from the Treasury Prime with account holder information
“On one side, we have banks,” he said. “We go into a bank and we help them automate their systems smoothly, which can increase their margins. On the other side, we have fintechs, who want to do some banking operations. There’s a million examples of these. That we’ve already gone in and integrated with the bank makes it easy for the fintechs to connect.”
The company, which prefers to operate behind the scenes, currently has 16 clients. One is Radius Bank, a $1.3 billion deposit bank based in Boston. “We help automate their operations,” said Dean. “If you open a bank account there, depending on the kind of account you open or in what way, you’re going to hit [our technology] sooner or later.” Treasury Prime also serves crypto banks, though Dean says there are not many of those due to regulation.
On the fintech side, their clients run the whole gamut. One example is NorthOne, which is a challenger bank focusing on small business clients. NorthOne’s applications have been designed by Treasury Prime.
“You wouldn’t know that,” he said. “We don’t want you to know that. We want you to be focusing on NorthOne.”
Another client of Treasury Prime is MaxMyInterest.com, a wealth management platform for high-net-worth individuals to manage their cash balances.
“Dealing with banks is hard and even people who are expert in it, like MaxMyInterest or NorthOne, realize that were they going to do it from scratch, it would take them a year or more,” he said. “But with us it just takes a few minutes, because all we do are these integrations, making it easy for our partners to use them.”
Dean is surprised by the fact that a fintech company can know their market so well, they can create a product that is better than a regular bank, while still depending on the bank. “NorthOne have really figured out a direct niche,” he said. “They really know small business owners better than anybody else.”
APIs help fintechs create viable business models, and are the wave of the future the way, the banking tech veteran believes. “It is how everything should be done, because it’s too hard to do some things [yourself]. Like for us, doing anything outside of banking is hard. Of course, we’re going to be better at it.”
He added: “APIs have developed into this language of how apps talk to each other, and if you look at a generic app on your phone or web, count the number of API they use. It’s crazy big. It’s not just like one or two. It’s usually like 20 or 30. That’s only going to keep going. It’s easier if I let Amazon handle my authentication or login via Twitter or my banking stuff via Treasury Prime.”
Core banking software is the heart of any bank. It’s the behind-the-scenes engine that processes all deposits, payments, loans, most bank transactions and customer data. Some banks still use core software developed 30 or more years ago, and have layered on top of it “ancillary” products, such as online banking and mobile banking software, creating a complex IT environment that is hard to manage and upgrade to launch new products and comply with emerging regulations.
“We’re like the engine that makes bank accounts for people,” Dean said.